Features
“Incident at San Miguel” – new novel set in the Cuban Revolution in 1958 provides rich insight into Jewish life in Cuba
By BERNIE BELLAN The history of Cuba’s Jewish community is quite an interesting one. According to Wikipedia, “more than 24,000 Jews lived in Cuba in 1924, and still more immigrated to the country in the 1930s. Following the 1959 communist revolution, 94% of the country’s Jews emigrated, most of them to the United States. In 2007 an estimated 1,500 known Jewish Cubans remained in the country, overwhelmingly located in Havana.”
I’ll get into my review of a book set in Cuban in the 1950s later, but first I wanted to provide some background about the very important role that Canada has played in helping the Cuban Jewish community, especially since 1973.
Following are some excerpts from past issues of The Jewish Post that will provide the reader with a basic understanding of how helpful Canada has been to Cuba’s Jewish community:
From the Nov. 24, 1983 issue: “Canadian Jewish Congress (CJC) will send $30,000 worth of religious articles and supplies to the Jewish community of Cuba, the World Jewish Congress has announced here. Ever since the U.S. severed relations with Cuba in 1960, the CJC has looked after the needs of Cuban Jews” (emphasis mine).
From the November 17, 1999 issue, headlined: “Canada played key role, helping Cuban Jews emigrate to Israel”:
I, myself, wrote the following: “On October 11, the Globe & Mail broke a story in this country headlined ‘Canada aids Cuban exodus – Secret transit of Jews has gone on 25 years.’ “
That story went on to detail how Canada had facilitated the emigration of some 400 Cuban Jews to Israel, beginning in 1973. (Cuba broke off diplomatic relations with Israel at the time of the Yom Kippur War.)
Subsequent to that story I was able to interview Lloyd Axworthy, who was Canada’s Foreign Minister at that time. I asked Axworthy about Canada’s role in helping Cuban Jews emigrate to Israel. He explained that, “beginning in the early 70s, we undertook to set up what we call the Israeli interests unit in our embassy (in Havana), staffed by a locally-engaged person, not only to represent Israeli interests, but also to expedite the emigration from Cuba of members of the Jewish community.
“Since it’s been in operation, there have been about 400 visas that have been obtained. What we do is simply work it from Havana to the Israeli embassy in Ottawa.”
That interview went on to explore how Canada had kept its role relatively quiet, although apparently it was very well known within the Jewish community in Cuba that if you wanted to emigrate you should approach the Canadian embassy.
As Axworthy noted during that interview, “We’ve been quite careful to keep it low key. There was no point in broadcasting it, because there are sensitivities in Cuba to such things.”
I came across another interesting aspect to the role Canada has played in helping Cuba’s Jewish community in 2013 when I learned that Canada’s then-ambassador to Cuba was someone by the name of Matthew Levin, who was an old childhood friend. I emailed Matthew in January 2013, asking him whether he would consent to an interview and he responded warmly.
He also happened to mention something else that I found quite interesting. In response to my telling him about my interview with Lloyd Axworthy many years prior, Matthew wrote in an email to me that “the connection with Lloyd Axworthy and Cuban Jews is of great interest. Coincidentally my wife is now coordinating the Aliyah program in Cuba from the Embassy.”
Alas, much as Matthew was willing to be interviewed, an apparatchik from what was then called the Department of International Affairs and Foreign Trade stepped into the mix and informed me that I couldn’t actually speak to Matthew; instead, I was told, I could email whatever questions I wanted to ask in advance.
I explained to the apparatchik that I wanted to do a folksy interview with someone who was an old friend and that emailing questions would deprive what I was wanting to do of any spontaneity. You can guess how far that went.
In any event, all this serves as a prelude to a review of a book that I actually finished reading a couple of months ago – and had wanted to review at that time. The book is called “Incident at San Miguel,” by A. J. Sidransky. Mr. Sidransky (and I did ascertain that he was a man, although it’s always difficult when you only know an author’s initials) had sent me a review copy of the book back in November, but I didn’t get around to beginning reading it until February.
After I did finish the book and emailed Mr. Sidransky to tell him how good I thought the book was – and that I was now ready to publish a review, I was somewhat surprised when he asked me to hold off publishing the review, writing “Could you hold the review for May? The book release is May 19. Right now we only have preorders for kindle to be delivered May 19.”
However, I just took a look and saw that “Incident at San Miguel” is available for pre-ordering, either in paperback on Amazon or in Kobo format.
Review of “Incident at San Miguel”
With that out of the way, let’s talk about the book itself. The foreword to the book is written by someone by the name of Miriam Bradman Abrahams, who explains that she is the Cuban-born daughter of Cuban Jewish refugees. Her family had been separated from the family that remained in Cuba for over 40 years, although some of her Cuban family had been able to visit Ms. Abrahams’ family in New York in 2001. Ms. Abrahams had long wanted to visit Cuba, she explains, but wasn’t able to do so until 2008.
She told the story of her family to A. J. Sidransky, who is a Spanish-speaking writer of fiction. Mr. Sidransky took elements of Ms. Abrahams’ story and mixed in some fictitious parts to produce “Incident at San Miguel.”
Here is a synopsis of the book: “Havana, Cuba. December 1958. Two brothers find themselves on opposite sides of Castro’s revolution. One dark night, after rescuing a leader of the revolt under house arrest, one brother finds himself hunted. The other, an influential attorney, must make a choice. Help his brother, placing the whole family at risk, or let Batista’s forces capture him. His decision will haunt them both for the rest of their lives. How far will we go to protect those we love? Based on a true story, Incident at San Miguel takes us there.”
Although I was somewhat familiar with the Cuban Revolution and Fidel Castro’s ascent to power, I was fascinated to learn that it was quite some time after Castro and his followers had taken over Cuba before he began to introduce communism to that island.
“Incident at San Miguel” begins in 1958, which was shortly before the then-dictator of Cuba, Filgenico Batista, was overthrown by Castro.
Two brothers, Aaron and Moises Cohan, find themselves on opposite sides of what is transpiring at that moment in Cuba, although, as the novel opens, we see that the brothers do get along quite nicely. Aaron is a lawyer, working in the Batista administration, while Moses is an economist who is aligned with the revolutionaries seeking to overthrow the government.
As the story develops we learn quite a bit about the Jewish community in Cuba at that time. Although most Jews would have been considered middle class, a number of them had become very wealthy businesspeople. The majority of Cubans, however, were quite poor.
In his own introduction, Mr. Sidransky provides an analysis why Jews were continually subjected to persecution by totalitarian regimes in the 20th century, writing that “As in all totalitarian regimes, there is always a boogeyman. In the case of the Nazis and the Hungarian Fascists in the 1930s and 40s that boogeyman was the Jews. In the case of communist systems, including Hungary under Soviet communism, and Castro’s Cuba, the boogeyman is the entrepreneurial or capitalist class. In the absence of a religious, ethnic, or racial minority to blame for the nations’ problems, Communism points its finger at an economic class to which it ascribes the suffering of its people and the nation.”
And, as successful members of that economic class – at least to some extent, it was hardly a surprise that Jews suffered under the Castro regime once communism became solidly entrenched as the economic model for Cuba.
But, as “Incident at San Miguel” relates, it was not at all clear what was in store for Cuba in the late 1950s. Batista’s secret police were everywhere, revolutionaries who were found out were either imprisoned or worse, executed, and despite the continued inroads that Castro’s and other revolutionaries seemed to be making, life in Havana, at least, continued in what seemed to be a normal fashion.
Moises Cohan, though, finds himself caught up in a daring plot to free a former professor of his, who is a hero to revolutionaries, and who has been held under house arrest by the Batista regime. Hence the name “Incident at San Miguel” because the particular incident in question, in which an attempt to free the professor, leads to a whole mess of intrigue as a result.
Moises finds himself on the run and seeks Aaron’s help in being able to escape. Aaron is torn between two worlds. He has been promoted to a senior position within the regime and, helping his brother would not only be a betrayal of that regime, it would be exceedingly dangerous.
Time moves on and on New Year’s Eve, January 1, 1959, the Batista regime folds and Castro’s revolutionaries march into Havana.
Mixed in with the political intrigue are the relationships the two brothers have developed with two vastly different women. Aaron’s fiancée, Beatriz, herself comes from a prosperous Jewish family, and she is perfectly at home with Aaron’s parents, Esther and Rafael.
Moises’ lover, Ana Teresa, in contrast, is a dedicated revolutionary whose first order of business is not romance, but fighting. Moises keeps his relationship with Ana Teresa a secret from his parents, knowing that they would be devastated to learn that he has taken up with a non-Jewish woman.
In time, both Moises and Ana Teresa rise to senior levels within the new Castro regime, yet their romance begins to flounder. Moises is an idealist who believes strongly in the ostensible goal of the revolution to bring about greater equality among the classes. Ana Teresa, it turns out, is a ruthless – and cynical, revolutionary, who is quite prepared to compromise her ideals if it means entrenching the new regime. When it becomes clearer, however, that the new regime wants to bring about equality by leveling the upper and middle classes, Moises begins to become increasingly disillusioned with what is happening – and with his lover.
A fascinating subplot develops when Moises happens to stumble upon a scheme whereby someone in the regime is reaping huge financial rewards through extorting Cuban businessmen, many of whom happen to be Jewish. Reading how Moises undertakes to get at the heart of this corruption introduces an exciting element of suspense into the novel.
We also learn how difficult it quickly became once the new regime was in place for Cubans to obtain exit visas. By this time Aaron and Beatriz have a young baby. The horrible dilemma with which Aaron has to deal is that bureaucrats are willing to let Aaron and Beatriz leave, but their child is denied permission.
That sets in motion a whole new set of challenges for Aaron – who would also love to be able to get both his and Beatriz’s parents out of the country. The parents, however, have a strong attachment to Cuba and are not interested in leaving the country.
I was somewhat surprised to learn that 94% of Cuba’s Jewish population did leave Cuba following the revolution – given how difficult obtaining exit visas was, but when I tried to deduce just how many individuals that figure of 94% represented, I wasn’t able to figure that out. If Cuba’s Jewish population was 24,000 in 1924, as Wikipedia says, and there was an influx of Jews from Europe in the 1930s, then the number of Jews who left Cuba following the revolution had to have been well over 23,000. How did they all get out, I wonder – especially after reading this book and learning how difficult it was for anyone to leave the country after a certain point? I’d certainly like to learn more about when and how so many Jewish Cubans were able to leave following the revolution.
Yet, in reading about the wonderful texture of life in Cuba prior to 1959 – at least for those who were able to enjoy a reasonably prosperous standard of living, such as the Cohan family did, life certainly seemed idyllic in many respects. The descriptions of the kinds of foods that are native to Cuba that the Cohan family was able to incorporate into their daily fare are quite tantalizing, as are the descriptions of the wonderful climate and the beautiful countryside.
“Incident at San Miguel” also provides many insights into the dynamics that underlay the Cuban revolution, including how much democratic ideals inspired so many of the young revolutionaries. While Fidel Castro himself only makes a cameo appearance in the book, Che Guevara plays a prominent – and altogether despicable role. While the book is a work of fiction, with many elements based on the true story of Miriam Bradham Abrahams’ family, the author has certainly done extensive research into life in Cuba in the 1950s. There are some vivid descriptions of how business was conducted – and how much corruption played a part in both the old and new regimes.
A political thriller with many romantic aspects and a vivid portrayal of a country that had so much promise had it not been exploited by one dictatorial regime after another, “Incident at San Miguel” is a riveting read.
Features
Bias in America’s Colleges Produced Modern Anti-Zionism
By HENRY SREBRNIK Jon A. Shields, Yuval Avnur, and Stephanie Muravchik, professors at the Claremont Colleges in California, have just completed a study, “Closed Classrooms? An Analysis of College Syllabi on Contentious Issues,” published July 10, 2025, that draws on a database of millions of college syllabi to explore how professors teach three of the most contentious topics: racial bias in the criminal justice system, the Israel-Palestine conflict, and the ethics of abortion.
They used a unique database of college syllabi collected by the “Open Syllabus Project” (OSP). The OSP has amassed millions of syllabi from around the world primarily by scraping them from university websites. They date as far back as 2008, though a majority are from the last ten years. Most of the data comes from universities in the United States, Britain, Canada, and Australia.
“Since all these issues sharply divide scholars, we wanted to know whether students were expected to read a wide or narrow range of perspectives on them. We wondered how well professors are introducing students to the moral and political controversies that divide intellectuals and roil our democracy. Not well, as it turns out.”
In the summary of their findings, “Professors Need to Diversify What They Teach,” they report that they found a total lack of ideological diversity. “Across each issue we found that the academic norm is to shield students from some of our most important disagreements.”
Teaching of Israel and Palestine is, perhaps no surprise, totally lopsided, and we’ve seen the consequences since October 7, 2023. Staunchly anti-Zionist texts — those that question the moral legitimacy of the Israeli state — are commonly assigned. Rashid Khalidi, the retired professor of Modern Arab Studies at Columbia, is the most popular author on this topic in the database. A Palestinian American and adviser to the Palestine Liberation Organization delegation in the 1990s, Khalidi places the blame on Israel for failing to resolve the conflict and sees the country’s existence as a consequence of settler-colonialism.
The problem is not the teaching of Khalidi itself, as some on the American right might insist. To the contrary, it is important for students to encounter voices like Khalidi’s. The problem is who he is usually taught with. Generally, Khalidi is taught with other critics of Israel, such as Charles D. Smith, Ilan Pappé, and James Gelvin.
Not only is Khalidi’s work rarely assigned alongside prominent critics, those critics seem to hardly get taught at all. They include Israel: A Concise History of a Nation Reborn by Daniel Gordis, a professor at Shalem College in Israel. Gordis’s book appears only 22 times in the syllabus database. Another example is the work of Efraim Karsh, a prominent historian. His widely cited classic, Fabricating Israeli History, appears just 24 times.
For most students, though, any exposure to the conflict begins and ends with Edward Said’s Orientalism, first published in 1978. Said is the intellectual godfather of so many of today’s scholars of the Middle East, thanks in no small part to this classic book. Said was a Palestinian-American academic, literary critic, and political activist from a prominent Christian family. Educated at Princeton and Harvard Universities, two of America’s most distinguished centres of higher learning, he taught at Columbia University, another Ivy League institution, until his death in 2003.
Said was no crude antisemite. His writings were aimed at academics and intellectuals and he has, in my opinion, done more damage to the Jewish people than anyone else after 1945. Said claimed to be the first scholar to “culturally and politically” identify “wholeheartedly with the Arabs.” But he was also a political activist for the Palestinian movement opposing the existence of Israel.
Said warned PLO leader Yasir Arafat that if the conflict remained local, they’d lose. Join “the universal political struggle against colonialism and imperialism,” with the Palestinians as freedom fighters paralleling “Vietnam, Algeria, Cuba, and black Africa,” he advised.
(In this he was not the first, though. Fayez Sayegh, a Syrian intellectual who departed for the United States and completed his Ph.D. at Georgetown University in 1949, preceded him. Also an academic, his 1965 monograph Zionist Colonialism in Palestine stands as the first intellectual articulation of Zionism as a settler colonial enterprise, arguing that the analytical frameworks applied to Vietnam and Algeria apply equally to Palestine. The treatise situated Zionism within European colonialism while presenting it as uniquely pernicious.)
Israel’s post–Six-Day War territorial expansion helped Said frame Israel as “an occupying power” in a 1979 manifesto titled The Question of Palestine. Alleging racial discrimination as the key motive was a means of transforming the “Zionist settler in Palestine” into an analogue of “white settlers in Africa.” That charge gained traction in a post-Sixties universe of civil rights, anti-imperialism, anti-colonialism, and Western self-abnegation. The work sought to turn the tables on the prevailing American understanding of Israel: It is not, in fact, an outpost of liberal democracy or refuge from antisemitism, but an instrument of white supremacy.
Orientalism popularized a framework through which today’s advocates on behalf of Palestinians understand their struggle against the state of Israel and the West generally. Said casts the Western world as the villains of history and peoples of the East as its noble victims.
The essence of the book, Said concluded, is the “ineradicable distinction between Western superiority and Oriental inferiority.” It falsely affirms “an absolute and systematic difference between the West, which is rational, developed, humane, superior, and the Orient, which is aberrant, undeveloped, inferior.”
So it was impossible to take Zionism seriously as one among the myriad nationalist movements that emerged in the nineteenth century, much less to see Israel itself as a land of refugees or the ancestral homeland of Jews. And, indeed, Said’s Orientalism singles out Israel for special rebuke, suggesting that the state could be justified only if one accepted the xenophobic ideology at the core of Western civilization. Israel’s defenders, particularly those who lament the lack of democracy in the Middle East and fault Arabs for their militancy, represent the “culmination of Orientalism.”
Said is widely acknowledged as the godfather of the emerging field of postcolonial studies, and his views have profoundly shaped the study of the Middle East. Said also inspired – and in some cases directly mentored – a generation of anti-Zionist U.S. scholars whose dominance in the academic study of the area is unquestionable today.
The political left that emerged trained itself to read every conflict as the aftershock of colonialism. The ideological narrative of oppression and resistance allowed even the jihadist to become a post-colonial rebel.
It’s hard to overstate the academic influence of Orientalism. The authors note that “As of this writing, it has been cited nearly 90 thousand times. It is also the 16th most assigned text in the OSP database, appearing in nearly 16 thousand courses.” Orientalism is among the most popular books assigned in the United States, showing up in nearly 4,000 courses in the syllabus database. Said’s work appears in 6,732 courses in U.S. colleges and universities.
But although it was a major source of controversy, both then and now, it is rarely assigned with any of the critics Said sparred with, like Bernard Lewis, Ian Buruma, or Samuel Huntington. Instead, it’s most often taught with books by fellow luminaries of the postmodern left, such as Frantz Fanon and Judith Butler.
All these ideas are now embedded into diversity, equity, and inclusion identity politics, and “humanitarian” outrage over supposed Israeli “settler-colonialism,” “genocide,” and “apartheid.”
The ground for the massive pro-Hamas college and university encampments, and attacks on Jewish students, was prepared decades ago. The long march of progressives through American institutions over the past decades has taken its toll on society.
Henry Srebrnik is a professor of political science at the University of Prince Edward Island.
Features
Exchange Rate Factors: What Global Events Mean for Savvy Investors
When Russia invaded Ukraine in 2022, it created ripples in all financial markets, including currency markets. The Euro weakened while the dollar surged and emerging market currencies wobbled. Global factors can quickly affect financial markets and shake established trends. Apart from such rare events, currencies tend to change their price because of interest rates, inflation, and overall investor confidence. For investors managing money abroad, understanding these movements is critical to avoid losses and mitigate risks.
Below, we will break down how global political, economic, and cultural events influence exchange rates, with insights for savvy investors.
Economic factors
There are several key exchange rate factors with a consistent history of shaking financial markets. These factors include inflation, interest rates, trade balances, employment rates, and so on. Since economic factors are shaping markets almost daily, we start with those.
Inflation and interest rates
Inflation and interest rates are closely connected as one can easily affect the other. When inflation rises, central banks step in and raise interest rates to reduce inflation, and when inflation is lower, central banks can lower interest rates to make borrowing money cheaper. As a result, investors closely monitor these two metrics to anticipate changes in interest rates. Higher inflation makes currencies weaker, and whenever banks change the rates, the changes are immediately reflected in global currency rates. In the United States, the Federal Reserve is the central bank that sets interest rates in the country.
Trade balances and economic growth
A country that exports more than it imports has a stronger demand for its currency. More demand equals a stronger currency. However, the Japanese yen was always weaker against the dollar because the BOJ of Japan tends to have super low rates near 0 to support its exporters. Economic growth also increases demand for local currency as more investors try to invest in the country’s economy. Long-term investors often track this data to detect early signs of any changes in currency strength.
Political and geopolitical factors
Elections, sanctions, and overall political stability are also crucial factors. If the country gets under sanctions, its economy crumbles and its currency becomes inflationary, losing its value quickly. Elections are also crucial for a currency’s strength. Geopolitical events can have a serious impact on the currency as well. The most obvious example is the 2016 Brexit events that made GBP lose its value rapidly and violently. Global conflicts, such as wars, can seriously impact global financial assets, especially currency markets. When tensions are high, safe-haven currencies like USD and CHF (Swiss Franc) become very popular among investors as they seek a safe place to protect their capital.
Cultural and social factors
People like tourists, workers, and diaspora communities can shape currencies as well. Tourism usually drives seasonal demand, and countries that are popular destinations during certain seasons experience their currency appreciation as demand spikes. The perception matters as countries seen as safe and opportunity-rich tend to attract more investors, solidifying their currency strength.
Technology and innovation
Technology is seriously affecting everything, especially the financial sector. Digital payment systems, blockchain technology, and fintech startups have made it easy and swift to move money around. Cryptos and stablecoins enable investors to protect their capital using stablecoins during volatile times. The latest trend among banks is to work on CBDCs, which signals a new era where national currencies are blended with technology and blockchain. Despite this, currencies, even in their crypto form, will continue to be influenced by all major factors mentioned above, and knowing how these factors impact your currency is key to keeping your capital safe from risks.
Practical lessons for savvy investors
So, what do all these factors teach us about global currency rates and investing strategies? The key lies in proper preparations and anticipation. Monitoring macro trends, policy announcements, and major geopolitical and political developments is critical.
Diversify
The number one method which is used by professional investors is diversification. This simply means to spread your risks across a basket of assets. By not investing all your capital in one instrument, you can mitigate risks. If one asset experiences a loss, other ones will counter it with returns. Building a diversified portfolio is key to properly diversifying. For example: divide your capital to buy stocks, commodities, currencies, and cryptos so that if one fails to perform, others will counter it. This ensures a stable income without unnecessary losses in the long run.
Hedge
Forex options and ETFs are great hedging assets. Forex options let investors lock in an exchange rate for a future date, which is very useful if you expect volatility but want stability. Currency ETFs, on the other hand, track specific currencies or a basket of currencies and allow easy trading or protection without trading forex directly, but they are still risky.
Monitor the economic calendar
Economic calendar is a free online tool that aggregates important macroeconomic news data such as interest rate decisions, CPI, inflation, employment rates, central bank announcements and speeches, and other crucial information. By monitoring them, investors can always know when important news data will be released, and they can postpone their investment decisions to avoid volatile times and only invest after the main trend is determined.
Features
The Canadian Dollar is on a slow decline. Should you save in euros or US dollars instead?
The Canadian dollar has been losing its value against the dollar this year. For Canadians, this raises a simple question: if your CAD is losing ground, is it better to move savings into euros or U.S. dollars, especially bonds, stocks, or a carry-trade strategy? Carry-trade strategy in this context means to borrow in CAD and invest it in the USA or the EU zone. This is a complex matter, and to understand where the CAD is, how attractive other currencies might be, we need to analyze these currencies more deeply. Below, we will walk you through the data, practical costs, and risks so you can reach a usable conclusion after reading this guide.
Quick snapshot – What the markets say right now
Recently, the Canadian dollar has hit multi-month lows due to weaker oil prices and a post-Fed (U.S. Federal Reserve) market reaction (which raised the rates, making the CAD weaker against the dollar). Canada’s central bank has cut its policy rate to 2.25%, while the Fed’s fund rate remains notably higher at about 3.75-4%. The ECB (European Central Bank) main interest rates are lower than the Fed’s and near the low-to-mid 2% range. While the Euro currency to USD rates remain mostly predictable, due to higher US bond yield rates, the EUR remains stronger, still. The U.S. 10-year Treasuries are around 4.1%, Canada’s 10-year near 3.2%, and Germany’s 10-year around 2.7%, meaning that today the USD-denominated bonds have the highest nominal yield among the three. As a result, the dollar seems much more attractive when it comes to bond yields and stocks.
Bonds – Which currency is the best for fixed income?
The short answer is: USD bonds. When it comes to nominal yield alone, US bonds beat almost all other competitors. U.S. government bond yields (10-year) are noticeably higher than Canadian and German/Eurozone bond yields right now. As a result, US bond buyers have more income potential than Canada and the EU. Euro-area core yields are lower, meaning they are paying less than the USA.
However, nominal yield does not mean it is guaranteed real return, and metrics like inflation, currency rates, and hedging costs can impact potential returns directly. If you buy USD bonds but the dollar falls against the CAD, currency losses will most likely wipe out the higher yield rate. If the Fed lowers its rates, it will make the dollar weaker against the CAD and EUR.
Another challenge is that, if you live and spend in Canada, you are using CAD, and when exchanging it for dollars, you get exposed to foreign currency rate risks, which must not be underestimated.
Stocks – Euro or dollar?
Both the EUR and USD have their advantages. USD has strong liquidity and strong long-term performance, while EUR equities offer valuation opportunities and recent relative strength.
Why USD?
The U.S. market remains the most liquid stock market with strong earnings for many tech and large companies. This makes USD stocks very attractive for long-term-oriented investors. S&P has been rising historically, and even after crashes, it often recovers its value relatively quickly.
Why EUR?
European indexes have performed well this year and in many cases cost less than their U.S. counterparts. While cheaper does not always mean better, these indexes still have some growth potential. Some major banks in the EU zone, together with industries, have recovered strongly with a recent focus on military manufacturing, making many EU stocks very attractive, together with local indexes.
However, here is a caveat: if you are using CAD daily and it loses its value against the euro, the returns from euro holdings might shrink, exposing you to greater currency risks.
Carry-trade analysis – Is it viable to borrow CAD and invest it in USD or EUR?
The basic promise of carry-trade is simple yet powerful: you borrow cheaper currency and invest it in currencies with higher yields. In our case, is it lucrative to borrow in CAD and invest in either EUR or USD? To answer this question, we need to look at numbers. BoC policy rate is 2.25%, Fed funds from 3.75%, U.S 10-yr is 4.1%, Canada 10-yr is 3.2%. If we deduct Canadian rates from the U.S. rates, we get around 1.8% positive before costs. So, in theory, it could be lucrative to invest CAD in USD assets using a carry trade. Since the ECB has around 2%, it is not profitable to use a carry-trade strategy for the euro.
The bottom line
While the CAD has been weakening lately, it is still not cheap enough to naively invest in USD or EUR. However, if you want a pure yield and can tolerate foreign exchange rate risks, USD bonds are more attractive today. When it comes to stocks, USD equities provide stable and liquid markets. If you want valuation potential and diversification, then euro equities have become more attractive this year. When it comes to carry-trade strategies, the USD remains more lucrative than the euro, but on paper, traders and investors should evaluate all the risks and costs before investing in any currency.
In the end, Canadians who have CAD for their daily costs should be careful when trying to get exposure to other markets. US bonds, US stocks, US carry-trade, and EU stocks remain attractive choices for experienced investors.